Alternative Liability Regimes for Medical Injuries

In the U.S. physicians and other medical providers are subject to a negligence rule of liability. Under a negligence rule a patient who is injured as a result of medical care is entitled to compensation only if he or she can show that the injury was caused by the physician's failure to take due care. Given a finding of liability, compensation is determined by a civil jury. In recent years the frequency of malpractice claims has been increasing at 10 percent a year and claim severity (average amount per paid claim) has increased at twice the rate of general inflation. Malpractice insurance rates increased at 25 to 40 percent a year between 1985 and 1987 (Danzón, 1988). Coverage for high risk specialities and excess limits of coverage have reportedly been unavailable. Concern over this "crisis" has generated serious consideration of radical alternatives tothe present negligence system, including nofault compensation schemes along the lines of those adopted in Sweden and New Zealand.